Thursday, March 1, 2012

From an email to my Secondary Education class at Western Washington University:

"This message applies to all sections of SEC 411 and actually every human living on planet earth.

I have been asked to email this TED Talk to you all after referring to it in class. Before you watch the video, however, i'd like to share some of my thoughts on the topic that Paul Gilding covers so eloquently. See attached links at bottom for TED Talk, information on Capitalism and an article on sweatshops.

In a class I took several years ago at WWU, the professor showed us a video that was a cartoon explaining capitalism (i couldn't find a link, i looked!). The video explained capitalism in a way that has really stuck with me and helped inform my understanding of not only capitalism, but also consumerism. I will do my best to explain it here:

Currently, the way we Americans (and those of other developed nations) view capitalism is as a black box theory. You can Wikipedia this idea, but essentially it refers to a system that looks like this: input -----> black box -------> output. The input and output are completely visible, but the black box, the function, the process, is unseen. In capitalism, the input is money and demand. The output, then, is the product or service we pay for. The black box includes everything that goes into delivering that product into our hands (shipping, production, waste, labor, etc).

So now you're thinking, "So what?" I put in money to the capitalism machine and products and service I want come out! That's awesome! There's a HUGE problem with this model, however. It's best illustrated by example:

Think about the last time you walked into a grocery or convenience store and purchased something. Let's say you bought an alarm clock for $3.00. If you look at the little sticker on the back, you see that it was made in China. Now think for a moment about the journey this cheap alarm clock has made to get to your hands. First of all, it had to be designed, then manufactured most likely using machine and human labor, then shipped by truck, then shipped by plane or boat, then shipped by another plane and/or truck to get to the store where it had to be put on display. Did I mention the value of the materials and the electronic components?

Clearly, even shipped in bulk, this alarm clock is worth more than $3.00. How does it become so cheap? This where the black box comes into play. Because the value of the input is LESS THAN the value of the output, the black box function represents NEGATIVE VALUE. In order for the alarm clock to have arrived at the store, someone or something received a negative market value for part or labor or some other process (this is the OPPOSITE of FAIR TRADE).

Here's what happened to our alarm clock in the example:

An American company decided it wanted to make alarm clocks. After some market research, they decided to make an low-end alarm clock in order to maximize their profits. They decided to set up a warehouse in China because the laws regarding fair wages, minimum wage, vacation hours, etc. are much more lenient there. Even with the cost of shipping, the company saves so much money by using labor from its sweat shop that it can easy compete with any company building alarm clocks in America (with much higher labor costs).

Do you see how the Chinese sweat shop workers are receiving the negative market value for their labor?

When the functions of the black box become exposed, the media and consumers are outraged. Just look at what happened with Kathy Lee handbags and Walmart...

This is still happening TODAY. RIGHT NOW. With just about any product you purchase. One of the main plants where IPhones are produced has had to install 'saftey nets' to prevent workers from committing suicide.

I think you all have heard enough about sustainability and carbon footprints to know that THE ENVIRONMENT IS ACCEPTING THIS NEGATIVE VALUE as well. Think about all the trucks and planes and boats it took for our alarm clock to travel around the world... Why not buy an alarm clock made in the United States? Because it costs more...

I hope this has explained to you how Capitalism (as it's being used today) is seriously broken. It's predicated on infinite growth and the idea that a free market will regulate itself (which is clearly not the case - ask a sweat shop worker who makes less than $20 a month). Humanity as a whole (not just America) has plundered the Earth far past the point of irreparable harm. OIL IS RUNNING OUT. Really quickly. Global warming IS being dangerously accelerated by human activity and pollution. If you believe that science is real, you cannot refute this. Our piles of trash are growing out of control (that's a black box process too, we export a lot of our toxic trash to poor countries by paying off their governments while the people suffer.)

Paul Gilding argues that humanity needs a crisis in order to create the fear that will allow us to solve this problem. It's like waking up and realizing you have a project due the next day and somehow finishing it on time. Humanity works well under extreme pressure. So in the meantime, plan for a sustainable future and look for ways to accelerate a crisis. Buy a Hummer. :)

I hope this has stimulated your brain! If you disagree or wish to provide a dissenting viewpoint, I'd be happy to set this up as a forum post in the Discussion Board on BlackBoard or in Western Forums. Just email me and I will stick it up for you to reply to.

-Steven Funcke
Woodring Post-Bac Program Candidate @ WWU


Paul Gilding TED Talk

Inside a Chinese Sweatshop - BusinessWeek article about Kathy Lee handbags and sweat shops

Khan Academy Dude on Capitalism vs. Socialism (He is biased towards Capitalism)
When Capitalism Is Great And Not So Great

Crises of Capitalism (awesome graphics along with a talk about Capitalism)
RSA Animate - Crises of Capitalism"